Dutch government sworn in, lacks reform mandate

<p>Netherlands' Prime Minister Mark Rutte bids farewell to outgoing Prime Minister Jan Peter Balkenende (L) after passing over of power at the Dutch Parliament in The Hague October 14, 2010. REUTERS/Jerry Lampen</p>

AMSTERDAM (Reuters) - A minority Dutch government relying on support from an anti-Islam party was sworn in on Thursday with the main task of cutting the budget deficit but without a mandate for sweeping market reforms.

Prime Minister Mark Rutte’s austerity-minded Liberals (VVD) only narrowly won June’s election, forcing him to seek support in parliament from the anti-immigration Freedom Party (PVV) to push through the budget cuts planned by the minority cabinet with the Christian Democrats CDA.

“This is a cabinet that of course has a political color,” Rutte said. “But the ambition is also to extend the hand outside the coalition and to enter dialogue.”

Rutte said his aim was to put government finances back in order and improve public confidence in the government by tackling issues such as immigration and public safety.

“It is good we have a government after such a long time, but if we look to the coalition agreement, we have to conclude that not much will happen on the economic scene in the next few years,” said Nico Klene, senior economist at ABN AMRO.

Klene said that given the VVD plans to reform the labor market, social security and healthcare “we have to conclude it is quite a meager programme.”

The government agreement tightens immigration rules and bans face-covering veils such as the burqa in exchange for the PVV’s support for the 18 billion euros ($25.1 billion) in budget cuts to bring the deficit within European Union limits by 2013.

Opinion pieces in Dutch newspapers portray PVV leader Geert Wilders as the clear winner from the coalition talks, withstanding Rutte’s wish to reform the welfare state and winning key elements in his anti-immigration programme.

The CDA was especially torn by the prospect of relying on support from Wilders, who is on trial on charges of inciting hatred against Muslims; but Rutte said the government would implement policy “in accordance with fundamental rights.”

Analysts have said, however, difference over immigration policy could bring the coalition government to an early end.

Rutte agreed the appointment of his intended ministers over recent days and Queen Beatrix officially swore in the government on Thursday afternoon.